Correlation Between Hyundai and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Hyundai and Sungdo Engineering at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hyundai and Sungdo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor Co and Sungdo Engineering Construction, you can compare the effects of market volatilities on Hyundai and Sungdo Engineering and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hyundai with a short position of Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Sungdo Engineering.
Diversification Opportunities for Hyundai and Sungdo Engineering
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hyundai and Sungdo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor Co and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering and Hyundai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hyundai Motor Co are associated (or correlated) with Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Hyundai i.e., Hyundai and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Hyundai and Sungdo Engineering
Assuming the 90 days trading horizon Hyundai Motor Co is expected to generate 0.6 times more return on investment than Sungdo Engineering. However, Hyundai Motor Co is 1.66 times less risky than Sungdo Engineering. It trades about 0.06 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about 0.01 per unit of risk. If you would invest 15,022,300 in Hyundai Motor Co on August 29, 2024 and sell it today you would earn a total of 1,997,700 from holding Hyundai Motor Co or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Motor Co vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Hyundai Motor |
| Sungdo Engineering |
Hyundai and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Sungdo Engineering
The main advantage of trading using opposite Hyundai and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Sungdo Engineering can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| Hyundai vs. Lake Materials Co | Hyundai vs. KB Financial Group | Hyundai vs. Jeju Air Co | Hyundai vs. LAKE MATERIALS LTD |
| Sungdo Engineering vs. Samsung Electronics Co | Sungdo Engineering vs. Samsung Electronics Co | Sungdo Engineering vs. Hyundai Motor Co | Sungdo Engineering vs. Hyundai Motor |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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